Hospital groups say a proposed mandatory Medicare payment bundling program may prove overly burdensome to an industry already working to implement other Centers for Medicare and Medicaid Services reimbursement experiments.
Last month, the Center for Medicare and Medicaid Innovation requested comments on its Transforming Episode Accountability Model, or TEAM, which would employ episode-based reimbursement for lower-extremity joint replacements, femur fracture surgeries, spinal fusions, coronary artery bypass grafts and major bowel procedures at select hospitals for five years starting in 2026.
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CMS touts TEAM as a way to improve quality and reduce costs by promoting care coordination from a procedure through 30 days afterward. Participating hospitals would bill Medicare at fee-for-service rates but be paid based on regionally adjusted target prices encompassing acute care and follow-up services.
“People with traditional Medicare who undergo a surgical procedure in a hospital or hospital outpatient department may experience fragmented care that can lead to complications in recovery, avoidable hospitalization and increased spending," a CMS spokesperson wrote in an email. CMS included its request for information in the hospital inpatient prospective payment system proposed rule for fiscal 2025.
The TEAM policy is still under development and CMS intends accept comments and flesh it out through future rulemaking. The agency set a June 10 deadline for comments and rebuffed the American Hospital Association and Federation of American Hospitals' request for a one-month extension.
But with the model scheduled to take effect in 19 months, the hospital sector is anxious that it won't have enough time to assess the proposal and prepare for compliance. Hospital groups also expressed concern that CMS may be testing one novel payment model too many.
“An organization could be undergoing transformation of their entire payment system under a hospital global budget while also implementing a mandatory bundled payment model and a mandatory transplant model in less than a year and a half, which is simply untenable,” Jennifer Holloman, senior associate director of policy at the AHA, wrote in an email.
Hospitals may indeed have their hands full, said Jeffrey Davis, health policy director for McDermott+Consulting.
“Model overload comes into play where hospitals could be in multiple models, and they may already be participating in another accountable care organization model or another type of initiative, and now you have these mandatory models that are placed on top of them,” Davis said.
Moreover, hospital groups are concerned that TEAM would affect a wide swath of hospital operations. “The scope of the rule is extremely broad,” AHA Executive Vice President Stacey Hughes and Federation of American Hospitals Executive Vice President Charlene MacDonald wrote to CMS Administrator Chiquita Brooks-LaSure May 17.
“For example, the five types of surgical procedures proposed for inclusion in TEAM comprised over 11% of inpatient [prospective payment system] payments in FY 2023 — a staggering amount that doesn’t even include the outpatient payments that would be part of the model,” Hughes and MacDonald wrote.
The Federation wants to know how CMS will set target prices so it can evaluate the ramifications for hospital finances, how smaller providers would fare under the model and how TEAM would fit alongside other payment models, President and CEO Chip Kahn said.
“We're trying to assess the interaction between the quality measures and shared losses and savings,” Kahn said. “We're discussing the experiences that our companies have had that are active in bundling or [the Comprehensive Care for Joint Replacement Model] and whether there are issues about overlap.”
Kahn and other industry representatives also took issue with the agency's intention to make TEAM mandatory for selected hospitals.
An optional version of TEAM would achieve the same results while not subjecting safety-net hospitals to startup costs and financial risk, America’s Essential Hospitals policy director Rob Nelb wrote in an email.
“We understand CMS' desire to improve safety net provider participation in CMMI models, but this approach could backfire if the model is not changed to reduce the financial burden it will impose on providers that are already in a precarious financial position,” Nelb wrote.
CMS does not appear interested in taking up that idea. "We believe mandatory models can improve the generalizability of model findings and capture a wider variety of providers from across the country, including many who have not participated in value-based payment models," the spokesperson wrote.
And the agency attempted to address safety-net hospitals in its initial proposal, the CMS spokesperson wrote. The draft TEAM policy offers safety-net hospitals a one-year track without downside risk and a lower-risk participation option, the spokesperson wrote.
